Speech by His Highness the Aga Khan to the "Marketplace on Innovative Financial Solutions for Development" in Paris, France

It is an honour to be here with you today and a great pleasure to greet the other patrons: the Agence Française de Développement, the Bill & Melinda Gates Foundation and the World Bank. Each has proved to be a highly valued partner of the Aga Khan Development Network. We are very grateful to them, and I express my heartfelt thanks for their invitation.

When preparing this speech, I thought I would tell you about generic difficult problems we encounter, such as the adequacy of financial development instruments to the needs of development projects.

Other subjects are the lack of planning and coordination in many countries of Asia and Africa, where we are very active, and public-private sector consultation in the provision of education and health services.

As far as those who finance development are concerned, it is a strategic issue which must be resolved. There are numerous issues of this kind, and they will certainly feature in your discussions.

I thought that it would be helpful to give specific examples of situations the Aga Khan Development Network has encountered in the field, and then to ask you to consider the issues I am going to raise and to suggest solutions useful to us all.

I would like to mention major international financing principles here. For us, in the Aga Khan Development Network, the fundamental problem lies in translating funds into effective programmes, institutions and activities in the poorest countries in the world. We have to convert the principles followed by financiers in international financial organisations into action in the field.

I realise that these issues may not fit easily into how your organisations categorise things, but please bear in mind that our approach reflects our experience in the field.

As you may know, the challenge of global development has been one of my central preoccupations over the last fifty years. In striving to understand the lives of widely dispersed Ismaili communities, I have also become immersed in the lives of their host societies. And I have been joined in that immersion by the institutions of the Aga Khan Development Network and our 60,000 employees, in more than 30 countries. Our experience, like yours, has been filled with both satisfactions and frustrations.

Over these fifty years, the world has made enormous, indeed breathtaking progress in many areas, but often where the needs are most urgent, our progress has been too slow. We have learned how to address particular symptoms of poverty, but unforeseen variables have diluted our impact. Perhaps most importantly, we have often failed to predict and to pre-empt tragic developments, such as famines and civil conflicts, even when they have been brewing over decades of despair.

The recent economic crisis has deepened such problems, adding to the urgency of our mission. Time is therefore more of the essence than ever before, and unless we can markedly accelerate our performance, our tasks will be further multiplied. Confronting these challenges, creatively and urgently, is nothing short of a moral imperative.

So the issue comes back to how do you translate international public will to support, into effective action in countries; the poorest countries of our world. That is the problem we deal with every day in the Aga Khan Development Network.

In fashioning our response, a heightened capacity for predicting risk and developing anticipatory responses will be critical. Predictability must become a key objective of our work; it is a science, which deserves far more attention from the development community.

I have no magical answers to offer. But I come to you this morning as one who has been watching and listening carefully in the developing world for a long time, and who has shared with my Network colleagues a point of view which we describe as looking “from the bottom up.” Our experience in the field has encouraged us to focus on the complexities and subtleties of development, to think as pragmatically and holistically as possible, and to develop responses which are punctual, targeted, and replicable.

I don’t mean to short-change the need for expanding financial resources and development. But a realistic assessment tells us that resource growth will be difficult, indeed we have learned recently, and regrettably, that government contributions have fallen short of the numbers that were pledged just five years ago.

But even as we work to change that picture, we also have a special obligation to maximise the impact of whatever resources are at hand. And again, the question is: how do you do that in the field? In order to do that, the first question I have asked is whether the nature of the development process itself has changed over time. I believe that it has. Let me explain this view by citing five principles which have grown out of our development experience.

First, I would cite the rising importance of civil society; by which I mean those not-for profit organizations which are driven by a public service agenda. Increasingly, I believe, a cross section of civil society players can be major engines for progress in developing societies, particularly when governments are underperforming.

Secondly, I would underscore the growing potential of what some call PPP’s - public-private partnerships. Such collaborations can tap the unique strengths of both sectors, overcoming outmoded dogmas which depreciate the role of the market-driven enterprises on the one hand, or which denigrate the capacities of publicly supported agencies on the other. Effective public-private partnerships must be genuinely participative, as committed leaders coordinate their thinking, sharing objectives, sharing strategies, sharing resources, sharing predictions. And this approach can be powerful, indeed very powerful, in the social and cultural development fields, not only in the more established economic one.

A third guiding concept for our Network, as for others, is what we call Multi-Input Area Development. The acronym is horrible, it’s MIAD - but we use it a lot. Singular inputs alone will not do the job - not in the time available, not across the wide spectrum of needs. But if we can work simultaneously and synergistically on several fronts, then progress in one area will spur progress in other areas. The whole can be greater than the sum of its parts.

The fourth touchstone is the recognition that social diversity, the pluralism of peoples, is an asset, not a liability for the development process. Even as we address the complexities of development in one context, we must also differentiate more clearly among contexts. Impoverished peoples are more diversified than is sometimes appreciated. Some 70 percent of the world’s poor live in rural environments, where diversity - ethnic, religious, social, economic, linguistic, political - is like a kaleidoscope that history shakes every day. Often these local distinctions can provide valuable levers for long-term progress.

Fifth and finally, I would mention what many call “Quality of Life Assessments”, a more adequate way to measure the results of our work. Quite simply, we need to embrace a wider array of evaluative criteria, both quantitative and qualitative, elements which the poor themselves take into account when assessing their own well-being.

As we measure outcomes with greater breadth, we will move beyond an excessive reliance on traditional categories, such as average productivity levels, or per acre yields, or per capita national product, or rates of population growth. Yes, these are all significant variables, but they come alive only as they transform the quality of daily living for the populations involved in ways in which they, and their children, can see and value.

This concern with quality assessments, of course, is not limited to the developing world. You may recall how President Sarkozy, speaking at the Sorbonne last September, described the inadequacies of traditional economic measurements. This view was echoed by the OECD - representing its 30 member countries - in calling for a new basket of quantitative and qualitative standards which reflect local conditions and local values.

And so the question I would pose is this: can we find new ways to fund the strengthening of civil society, to support broader public private partnerships, to encourage multi-input area development, to adapt to pluralistic human contexts, and to embrace a wider array of qualitative and quantitative measurements?

Let me turn from the general to the specific. And here I will share with you examples of important initiatives being taken in various parts of the world which fall outside this traditional context of international funding and it is therefore a set of examples which I think will be useful for you as you discuss new methods of funding development.

One area of the world in which our work has been focused is in the high mountain regions of Central Asia. Badakhshan, for example, is a sensitive region in eastern Tajikistan and Afghanistan, where the same ethnic community is divided by a river which is also a national border, and where both groups live in extreme poverty. Here we are pursuing a coordinated programme involving water and land management, health and education, energy and transportation, microfinance and telecommunications, culture and tourism. With inputs from many partners, and an emphasis on local choice, this effort touches the lives of a million people.

But having described this promising example let me ask how such initiatives might best be financed. If this programme works, could it be applied to the similarly divided Pashtun peoples, who live at the other end of Afghanistan and in neighbouring Pakistan? And is it not predictable that once the military have left that area, a new birth of civil society institutions will be required?

A second illustrative AKDN project in the same region is the new University of Central Asia. There are 25 million people who live in this high mountain environment, but there has been no specialised tertiary institution to educate them. And so a new independent, self-governing University of Central Asia was founded under an international agreement between the governments of Kazakhstan, Kyrgyzstan, Tajikistan and myself. It will have campuses in all three countries. It will specialise in educating people for high mountain environments. But I ask again: how do we best mobilise resources for ventures like this, which span the public private divide, cross national frontiers, and address a fundamental educational vacuum?

In another part of the world, we have been involved for 25 years in a once-degraded neighbourhood amid the ruins of old Islamic Cairo. The creation there of the Al-Azhar Park has been a powerful catalyst for urban renewal in the impoverished district of Darb al-Ahmar. This environmental and archaeological project has grown into a residential, recreational and cultural cityscape, attracting two million visitors a year and producing impressive, sustainable, and measurable economic growth.

Tens of thousands of the ultra-poor who live in this area live now with new hope for a better life. Using historic preservation as a linchpin for development is an eminently replicable approach. But here again, what are the funding instruments for development where culture is the driving force for change?

A fourth example comes from East Africa, where the Aga Khan University leads in establishing an East African Health System, a regional, not-for-profit, private sector initiative. Its focus is also multi-faceted: including community health services, secondary and tertiary referral hospitals, medical and nursing education, and state-of-the-art technologies. It will serve the populations of Kenya, Tanzania, Uganda, Rwanda and Burundi. But again, how does an effort which is essentially non-governmental, but which interfaces with five different governments, best find the funding it requires? Happily, I can begin to answer that question by citing the creative response which has been given to this initiative by the Agence Française de Développement.

Each of the cases I have cited today is singular. Each requires tailored financial instruments to succeed. They seem quasi-impossible to find. But it is here, in addressing new development challenges, that you and your colleagues can have a truly significant impact.

Aga Khan Agency for Microfinance

Microfinance for Women in Northern Pakistan

Since its establishment in 2005, the Aga Khan Agency for Microfinance (AKAM) has taken over 25 years of microfinance activities, programmes and banks that were administered by sister agencies within the AKDN. The underlying objectives of the Agency are to reduce poverty, diminish the vulnerability of poor populations and alleviate economic and social exclusion. more